Update: Foreigner Participation in China’s Social Insurance Scheme

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By Eunice Ku

Oct. 18 – Since China’s Ministry of Human Resources and Social Security issued measures in September 2011 stating that social insurance contributions should be paid on behalf on foreigners working in China, local policies governing the implementation of the measures have varied considerably.

Cities including Dalian, Shenzhen, Beijing, Suzhou, Tianjin and Xiamen have implemented local implementing rules requiring foreign employees to enroll in the social insurance scheme and contribute to some (if not all) of the insurances, while others have yet to implement policies mandating any participation.

Dalian currently requires only pension payments to be made on behalf of foreign employees, while Shenzhen requires employer payment towards four insurances (with foreign individuals paying only pension and medical insurances) and Beijing, Suzhou, Tianjin, and Xiamen require payment of all five insurances.

As of the end of 2011, 7,800 foreigners have begun participating in Beijing’s various social insurances, and as of mid-August 2012, approximately 7,000 foreigners have begun participating in the social insurance system in Jiangsu Province as a whole, according to media reports.

Not all major cities have implemented policies requiring social insurance participation. Shanghai, for example, permits foreign employees working in the city to voluntarily participate in pension, medical and work-related injury insurances. However, from the time of promulgation of this policy (October 2009) until April 2011, fewer than 100 foreigners have begun participating.

When policies mandating participation may be issued in Shanghai and the other remaining cities remains uncertain.

Portions of this article came from the October 2012 issue of China Briefing Magazine titled, “Social Insurance and Payroll.” In this issue, we take a “back to basics” approach to China’s mandatory benefits. Where, exactly, is that extra 35-40 percent on top of an employee’s salary going? What are social insurance contribution rates, base amounts, and tax exemptions? How does all of this figure into the payroll process? We next look at mandatory benefits as a piece of the larger payroll puzzle, with highlights on two very China-specific pieces: FESCOs and hukou, China’s “domestic passport.”

Dezan Shira & Associates is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia. Since its establishment in 1992, the firm has grown into one of Asia’s most versatile full-service consultancies with operational offices across China, Hong Kong, India, Singapore and Vietnam as well as liaison offices in Italy and the United States.

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3 responses to “Update: Foreigner Participation in China’s Social Insurance Scheme”

  1. […] mandating any participation. Dalian currently requires only pension payments to be made on … Continue reading → China Briefing News google_ad_client = "pub-0640235153451199"; google_ad_width = 728; […]

  2. Brian says:

    I’d love to see you do a report on what the payout is supposed to be for any of these schemes. If a foreign woman gets pregnant here in China, what benefit does she receive. How does she go about making that claim?
    How do I collect my housing benefit? What are the terms and conditions for receiving this benefit? How do I apply?

    I’ve heard foreigners will get their money back (at least from some of the plans) when they leave. What do they have to do to get their money?

    I have little doubt that much of this has not been thought through or specified, but it’d be nice to see DS/CB address this portion of the equation as best you can. (If you covered this in the magazine, thanks and apologies, I haven’t seen it yet)

  3. @Brian, some of these questions and mechanisms have not yet been fully answered or defined. However we cover this subject extensively on China Briefing and provide updates whenever there is news on the subject. I guess keep an eye open here. You can also subscribe to China Briefing (its free) and get our weekly round up of this type of news. Please see the red subscribe button right at the top of the page here. Thanks – Chris

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